Ex-Barclays CEO Bob Diamond is making a big bet on Italy just weeks before its crucial election

Former Barclays CEO Bob Diamond plans to invest heavily in a new fund designed to lend to small businesses in Italy, Bloomberg reported.

The vehicle is being led by the former CEO of Italy's second largest bank Intesa Sanpaolo, Corrado Passera. It will be known as Spax.

It plans to raise around €600 million of capital.

LONDON - Bob Diamond, the former CEO of Barclays, is making a big bet on one of Europe's riskiest areas of investment — Italy.

Diamond's private equity firm, Atlas Merchant Capital, is the top investor in a new €600 million (£533 million; $738 million) investment vehicle designed to help provide loans to small and medium enterprises in the eurozone's third laregst economy, according to a report from Bloomberg Businessweek.

The vehicle is being led by the former CEO of Italy's second largest bank Intesa Sanpaolo, Corrado Passera. It will be known as Spax.

Passera, who was also Italian economy minister from 2011 to 2013, announced the plans back in December 2017, and was said to be seeking investors for his new venture.

It now appears that Diamond's Atlas Capital is taking a sizeable role in the fund, although it remains unclear exactly how much it has invested.

Politically, Italians will go to the polls in under three weeks, with the populist Five Star Movement widely expected to be the biggest party, and a serious prospect of a populist led, eurosceptic government in power.

Diamond, however, doesn't see that as source of fear.

"That's not something we worry about," he told Businessweek.

"The political situation is very well-known. What we are finding is that regulators and political leaders believe there isn't enough credit provided to small businesses. We see great opportunities for high-quality lending to strong companies."

Diamond left his post as Barclays' boss soon after the lender became the first bank in the world to settle with US and UK authorities after the LIBOR scandal. His more recent ventures include Atlas Mara, a firm dedicated to becoming "sub-Saharan Africa's premier financial institution."